Greenspan legacy bulletin, 1998

NEWS CONTENTS

• 19981231 : The Free Market Mr. Moral Hazard by Jeffrey Tucker ( The Free Market Mr. Moral Hazard, Dec 31 1998 )
• 19981231 : Greenspans IMF Failure Good for Bankers ( )
• 19981231 : EIR Report on Greenspans Monetary Bubble ( )
• 19981231 : Alan Greenspan, Banking & Ayn Rand When This Man Talks (or Even Whispers),Whole World Listens James N. Thurman, Staff writer of The Christian Science Monitor ( )
• 19981231 : Greenscam -- Fake Money & Fake Inflation/Deflation as Theft ( Jerry White's Report, Sept 1, 1998 )

Old News ;-)

[Dec 31 1998] The Free Market Mr. Moral Hazard by Jeffrey Tucker

December 1998
Volume 16, Number 12

The phrase of the day is "moral hazard." It's something everyone seems to think is a bad thing, but few are willing to do anything about, certainly not Alan Greenspan. So far, he's on record backing the Mexican bailout, the Asian bailout, the bailout of Long-Term Capital Management, and more IMF funding, despite the financial dangers all these create down the line.

Somehow, consistent with the mirages daily created by the Fed, Greenspan is still perceived as an old-school capitalist who wants the chips to fall where they may. In public appearances, he's even explained and criticized the moral hazard inherent in bailouts, loose credit, and financial leniency in general. These practices appear to contain the harm caused by profligacy, excessive risk-taking, and unwise investment, when, in fact, as he has pointed out, they risk perpetuating those very behaviors.

The idea is simple. If you are continually willing to protect people from the consequences of their own errors, your benevolence will be factored into the future decisions of the persons rescued. In the long run, they will make even more errors. The principle exists at all levels. The teacher who changes grades when students plead hardship isn't helping in the long run. The teacher is rewarding and thereby encouraging poor study habits. He is creating moral hazard.

So it is in banking and finance. How was it that the hedge fund Long-Term Capital Management, bailed out on pressure from the Fed, believed they could be leveraged 50-100 to 1 in some of the riskiest financial instruments in the world? True, the fund employed people who were said to be the smartest guys on Wall Street, plus two winners of the Nobel Prize in economics, and that gave the firm credibility the town-fair magician can't get. True, also, that returns of 40 percent in 1995 and 1996 reinforced the appearance of superhuman intelligence.

More fundamentally, however, moral hazard was there from the very beginning. Credit has been generally loose in the mid and late nineties. The firm's money was being loaned by banks backed by deposit insurance and an implicit too-big-to-fail doctrine on the Fed. The firm's preferred investment targets (like Russian bonds) were backed by a bailout promise as well. The risk spiraled onwards and upwards until one day it unraveled, and the fund itself was bailed out.

One week after the bailout, Greenspan put his homilies on financial prudence on hold to defend his push for the bailout of Long-Term Capital. He said it was necessary to prevent the firm from being sold at a disruptive "fire sale." If he had allowed that, it "would result in severe, widespread, and prolonged disruptions to financial market activity." His intervention enhanced "the probability of an orderly private-sector adjustment."

Spoken like a true believer in central planning. What he calls a "fire sale" was nothing more than the sale of a company at its true market price. As the Wall Street Journal revealed, the same day that the Fed pulled together a plunge team to kick in $3.5 billion, three other parties (AIG Insurance, Goldman Sachs, and Warren Buffett) made a collective offer of $250 million for the company, with an extra $3.75 billion kicked in to run the existing portfolio. However, they rightly insisted that the founder of the fund, the famed John Meriwether, had to be ousted.

Such is life under capitalism. Big profits can be had, but so can big losses. Long-Term's assets had fallen from $4.8 billion in January 1998 to $600 million by late September. It is rightly assumed that anyone who invests in hedge funds (multi-millionaires, all) understands the risks. Long-Term Capital should have been thrilled there were buyers at all.

But while its managers liked playing the market, they apparently didn't like the market playing them. So they rang up the Fed (a former vice chairman of the Fed is a partner), explained the stakes, and the Fed went to work overriding the reasonable market offer (the "fire sale," as Greenspan says). The result was an infusion of funds 62 percent higher than the market offer. And John Meriwether got to keep his job.

Greenspan claimed that nothing less than the world economy was at stake. But it also happens that nearly every important banker in New York had lent money to Long-Term Capital, and they were all made vulnerable when sudden changes in the bond market wiped out the firm's portfolio. The Fed's institutional well-being is tied up with such banks, moral hazard or not.

Perhaps it shouldn't surprise us that the Fed, not a market-created institution, would favor these kinds of public/private deals. But that doesn't mean that they make economic sense. Actually, Greenspan's meta-phor of a "fire sale" is entirely apt. After a fire, burned and smoke-damaged objects should sell for their market, much-lower price. Con-sumers benefit and damaged goods are liquidated. If an outsider comes along to force the sale of burned objects at twice their market worth, it makes people just a shade less attentive to the demands of fire prevention.

(As an aside, free markets, unlike governments, are structured to reduce moral hazard to a bare minimum. Insurance companies that don't take account of variables that affect the likelihood of accidents lose profits, unlike those who whittle down all variables to the random ones. That's why insurance companies appear to be so snoopy, wanting to know about every speeding ticket and every cigarette smoked. They are in the business of assessing hazard and prosecuting fraud in cases where moral hazard exists.)

What's going on here with Greenspan, who says one thing and does another? Murray Rothbard addressed this question when Greenspan first ascended to the throne. He pointed out that Greenspan is a long-time proponent of the gold standard, but only in theory. "In the real-world," says Greenspan, "all the conditions have to be just right to have a gold standard. The budget has to be balanced, the government has to be small, and the banking system must be perfectly sound. So long as those conditions are not in place, we can't have the gold standard."

There's an analogy here with Greenspan's position on the moral hazard. In effect, he says, central bankers and government officials should never encourage it, losses should be born by the risk-taker, banks and hedge funds should be on their own, unless, of course, conditions are not ideal. The truth is that conditions are never ideal, and the Fed is part of the reason. But with his convenient mental categorizations, Greenspan is allowed to pursue disastrous policies while at the same time escaping blame for them.

So long as his policies appear to work, he can get away with it. But since actions have consequences, in the end, his legacy may yet be as the Fed chairman who was Mr. Moral Hazard.

Jewish Leaders Folder: Alan Greenspan

Greenspan's IMF Failure Good for Bankers

Rep. Bernie Sanders (I-VT), Questions Alan Greenspan, Chair, Federal Reserve System, Robert Rubin, U.S. Treasury Secretary, and Larry Summers, Deputy U.S Treasury Secretary.

Hearing of the House Banking and Financial Services Committee on The World Economic Situation and the U.S. Economy

September 16, 1998

REP. LEACH: Thank you. Mr. Sanders?

REP. BERNIE SANDERS (I-VT): Thank you, Mr. Chairman. You're probably not going to miss me, but I think I'm coming back, so --

SEC. RUBIN: And Mr. Sanders, we look forward to it. (Laughter.)

REP. SANDERS: Mr. Chairman, in all due respect to my friends Mr. Greenspan, Mr. Rubin, and Mr. Summers, their testimony, which is similar to testimony that we have heard from them in recent years, is coming from an "Alice in Wonderland" perspective; it just doesn't have anything to do with reality. Mr. Chairman, whether anyone likes it or not -- and I hate to break this to you -- the IMF has failed and failed dismally. Given the horrendous record of the IMF in making life worse for the people of Mexico, worse for the people of Asia, worse for the people of Russia, not to mention all of the austerity programs in Africa, in Latin America, and the misery that those programs have caused, why in God's name would anyone want to continue along the incredible path of failure that has been the record of the IMF? That, t my mind, would be insane. Now, Mr. Chairman, that's my view. But let me mention to you and quote the point of view of a number of other people whose opinion is not normally mine. This Sunday's -- just last Sunday's New York Times, and I quote: "It's only a bit of an overstatement to say that the fre market, IMF, Bob Rubin, and Larry Summers model is in shambles," end of quote, said John S. Wadsworth Jr., who runs Morgan Stanley's operations in Asia.

According to a Wall Street Journal editorial from July 20th, 1998, quote: "The IMF helped create the very crisis that Mr. Camdessus says he now needs more money to solve," end quote.

And the Wall Street Journal, not noted to be a progressive organ that I have a lot in common with, has constantly talked about the failure of the IMF and the issue of moral hazard.

Now let me quote from a very important letter that we received in Congress from 126 delegates to the Mexican congress, from the PRD party, the second largest political party in Mexico, and I quote, "Contrary to the view promulgated by the Clinton administration and the U.S. media, the packaging of $12.5 billion from the exchange stabilization fund and $17.8 billion fro mthe IMF to bail out Mexico benefited only foreign investors and a small grou of already-wealthy Mexican investors while wreaking havoc on our national economy." End of quote.

A letter from 140 American and international environmental groups, labor unions, and development organizations says, and I quote, "The disastrous impact of IMF-imposed policies on workers' rights, environmental protection and economic growth and development, the crushing debt repayment burden of poor countries as a result of IMF policies and the continuing secrecy of IMF operations provide ample justification for denying increased funding for the IMF." End of quote.

Let me say a word about Russia; poor, tragic Russia. When communism fell in 1991, the Russian government received the attention and the policy guidance and $20 billion from the IMF, and it is fair to probably say that never in the modern history of this world has one country, which started off as an industrialized nation with an inefficient economy, to be sure, never before have we seen an economy decline in seven years like the Russian economy has declined under the guidance of the brilliant advice of the IMF, not to mention $20 billion in taxpayer money. And I don't have to tell you, you know that. This is a country that used to manufacture; they don't do it any more. Their children are hungry, their old people don't receive pensions; they used to produce food.

Now they import food. But meanwhile, they now have a handful of billionaire oligarchs who have made a fortune illegally having a substantial role in running that country.

So, Mr. Chairman, it is fine for all of us in a very congenial way to be laughing and chatting about what's going on, but I think we are blind not to recognize that the IMF has failed. And while we do not and must not turn ou backs on what's going on in this world -- and please do not hear me to say that. And I think, Mr. Chairman, your suggestion about thinking about providing food to Russia when this winter is coming is a very important suggestion -- we must not turn our backs. But any major league manager that has a pitcher who's won three games and lost 20, you know what? You say to that pitcher, Thank you, you're going down to the minors. We're trying a ne strategy. Your strategy has failed.

So I would simply like to ask Mr. Greenspan or Mr. Rubin or Mr. Summers how, given the horrendous record of the IMF in Russia, in Asia, in Africa, in Latin America and all the suffering that it has caused to poor people while rich people in almost every country have become richer, how in a straight face can you come before the taxpayers of the United States and say, Hey, we want $18 billion more to continue this failed policy? Mr. Greenspan? Mr. Rubin?

MR. GREENSPAN: Congressman, if we agreed with your appraisal I think we would agree with your conclusion. I think the problem is we don't agree with your appraisal.

REP. SANDERS: Yes, you think that the success -- that the IMF has been successful in Russia after $20 billion in guiding that country since the fal of communism?

MR. GREENSPAN: I think I stipulated the conditions under which I think they have failed or succeeded. I would not characterize what the IMF has done anywhere as an unmitigated success. But I scarcely would conclude the wholl negative view which you have adduced.

REP. SANDERS: Mr. Greenspan, your testimony goes around the world very quickly. And I think that maybe the people of Russia today who are suffering so terribly, who have seen such a major decline in their economy through IMF guidance over the last seven years, would love you to tell us and tell the mabout the successes of the IMF in Russia.

MR. GREENSPAN: I would say that the IMF had very little to do with the decline that existed in Russia. I think that you start off with a centrally planned economy in which a goodly part of what they are producing is not available to be sold in the market, and that very rapidly dissolves. I'm no arguing that they moved from a centrally planned economy to a free market economy. That's scarcely the case.

I've argued elsewhere that, indeed, the type of markets that they have is scarcely the type that we support; that is a rule of law, a structure which has -- an institutional structure which enables exchange to be viable and productivity efficient. Russia has scarcely been able to do that. And I would suggest to you that if the IMF never existed, we'd be looking at very much the same sort of problems that they have.

REP. SANDERS: But we put $20 billion of IMF into Russia. My next question i one that has not been --

REP. LEACH: Excuse me --

REP. SANDERS: Just one more question, Mr. Chairman. I think others have had as much time. And this is a perspective that we're not hearing too much fro this committee today.

REP. LEACH: You're true on your perspective, you're true that others have gone over. We're over about 10 minutes. We have a lot of members. If you could ask it very briefly.

REP. SANDERS: Sure.

We've learned recently, through the subcommittee that Mr. Bachus is the chairman of and I'm the ranking member, that in fact, despite all the resolutions and amendments passed by the United States Congress urging our representative to the IMF to use his or her voice and vote to protect workers' rights or moral hazard, guess what? We have learned that our representative never asks for any votes at the IMF and virtually all of the important decisions are taken without votes. Now what does this tell about IMF and the Treasury Department's respect for the will of Congress? Mr. Summers, did you want -- or Mr. Rubin?

SEC. RUBIN: Let me, if I could, respond to that, Mr. Sanders. I think actually it makes the point in the opposite direction that you've suggested.

There are very few votes taken. Most of this is resolved through informal conversation and discussion. No, that's precisely the point. And it's voice and vote. And let me assure you that we are exceedingly mindful of Congress's directions with respect to the use of the voice and vote, and hav used that voice very powerfully in the consultations. So that while it is true relatively few of these decisions reach a vote, we are much more effective on behalf of that which Congress has directed us to do through a consultation process in which we can exercise intellectual and moral suasion than we are in a vote where we're only one of 182 nations, although we, I think, have something like 18 percent of the vote.

REP. SANDERS: Yeah, but we have veto power. Could you give us that discussion about our role, or is that closed discussion?

SEC. RUBIN: Excuse me?

REP. SANDERS: Can you provide us that evidence, the testimony about the role that we play within these IMF discussions, or is that closed information?

SEC. RUBIN: We would be happy to come and discuss it with you, if you'd like

REP. SANDERS: But it's secret information; it's not published?

SEC. RUBIN: Let me say we are very much in favor of increased transparency i the IMF, if that's your point. We agree with that.

REP. SANDERS: Thank you.

SEC. RUBIN: But we are also very happy to come discuss the issue with you.

REP. LEACH: Mr. Lucas?

EIR Report on Greenspan's Monetary Bubble

PAPERT: Welcome back to EIR Talks. This is Tony Papert. With me in the studio now is EIR economics writer Richard Freeman. Rich, we were discussing earlier with John Hoefle, the bailout, or the takeover, of the Long Term Capital Management hedge fund. As that was going on, exactly one week ago today, on Sept. 23, Fed chairman Greenspan, whose organization was arranging the bailout, was testifying before the Senate budget committee. FREEMAN: Well, I would say we should watch a clip here of his testimony, on Sept. 23, and I would just draw people's attention to two things. First, that he says that this has a minimal effect on the United States -- the whole world financial disintegration that's ongoing. And second, his recommendation, which is to basically keep the current financial structures, because they're so sound and robust, and can withstand any problems, and if you have to make changes, make changes on an {ad hoc} basis.

PAPERT: So, let's turn to that clip now. [Greenspan video excerpts] FREEMAN: I think the key thing to say, Tony, about his testimony Sept. 23, is that here you have a person telling everybody about the minimal risk that the world faces, who's lying through his teeth, because at that very moment there are meetings going on at the Federal Reserve Bank of New York to try and prevent a breakdown of the world financial system through these derivatives. And Greenspan, I think, now stands thoroughly discredited. He has said repeatedly in Congressional testimony over the last two to three years, that derivatives are not a problem, [that] in fact they're a very dynamic instrument, and so forth and so on. And I think at this point the IMF, the Federal Reserve, and all the so-called financial experts in the world stand thoroughly exposed on this question. I think the thing to realize about Greenspan is, first, his role on derivatives. He has been running protection for the derivatives market over the last of years. In 1997, he gave testimony, actually spoke before an event of the Atlanta Federal Reserve District, in which he said that regulation could be no good, and that it could be very destructive. At the same time last year, the Financial Accounting Standards Board, which is a board of independent accountants who 0certify all corporations of any size in this country, came forward with what I'd call a rather timid proposal, which basically said, let's take these off-balance-sheet liabilities which nobody knows how much an institution has, and put them on the books at current market value, so people know what they're worth, and what's there. And Greenspan wrote three letters during the summer of last year, to the Congress and the Financial Accounting Standards Board, protesting, saying that if this were done, among other things, this would lead-- wreck, prudent financial management. In other words, the financial management would go out the window if people knew how much the derivatives size was. His third letter was signed by 22 of what he called major corporation heads. When you then look at the number of people who signed, they were all heads of the major banks of the United States. This year, the head of the Commodity Futures Trading Corporation, which has regulation over exchange trading in derivatives, said, let's look into the risk of non-exchange-traded derivatives, which are sometimes called `over-the-counter.' And these are traded by the banks and the hedge funds. And Greenspan attacked this proposal, attacked the CFTC, and got his people in the Congress once again, to hold hearings, to put a stall to any reporting...

PAPERT: ... to make it illegal for them to even do a study. FREEMAN: ...to even study that there might be a serious risk, that people would know that. And so I think that Greenspan has said repeatedly he's against regulation, he has shown his colors as basically -- to pick up an analogy that John used earlier -- a mafioso running a protection racket for derivatives. And I would point out to people that Greenspan came in as Federal Reserve chairman in August of 1987. The total value of all derivatives in the United States was about $3 trillion. Today, if you could [add up] the banks, which have $28.5 trillion in derivatives (that's the commercial banks), but also the investment banks and other corporations, we have $40 trillion of derivatives. And I think that this should accurately be called the Alan Greenspan derivatives bubble.

PAPERT: And it's a cancer. Now this also affects Japan, but more generally. Could you talk to us about the status of the economic-financial crisis in Japan? FREEMAN: Absolutely. I'd just like to add one word on Greenspan. He has been recommending putting the Social Security Trust Fund into the stock market. He has called for slashing Medicare. He has attacked infrastructure building. And the guy is really a piece of work. He's a follower of this cultist named Ayn Rand. He joined the cult in the '50s, has kept friends.... His personal accountant today is a member of the cult from way back when.

PAPERT: Really? FREEMAN: Yes.

PAPERT: So he's kept up his ties to it. I didn't realize that.

FREEMAN: And when he was put in as the head of Nixon's Council of Economic Advisors, there was Ayn Rand, sitting in the front row to see her prize student take the oath of office. Now, her view is that the world populations are motivated by personal, Hobbesian drives, that the state doesn't exist, that individual concern for others is wrong and evil. And I think people should just have in their mind ... and she blows things up. Her books end up with buildings being blown up, and wanton acts of destruction.

PAPERT: She always wore a pin... I don't know if she's still alive, but she always wore a pin that was a dollar sign.

FREEMAN: And when she was buried, her shroud was a dollar sign put on her coffin. So, you have to have this image of this fellow who sometimes sits there putting his hand on one finger, and babbling on, and most people say that they try to interpret what he's saying, and in his own mind, he's thinking of blowing things up and destruction. That's why I think he has a personal affinity for this derivatives market.

But to take up your question on Japan.

Look, this Japan situation is very, very advanced. You have a banking system that is larger than the United States'. They have what are estimated by German banks in Tokyo, to be $1.5 trillion of non-performing loans -- we have heard figures that are even higher. They have no ability to pay off these loans in any reasonable way. Just on that alone, the Japanese banking system -- being the biggest in the world, we're the biggest economy, they're the biggest banking system -- has enough to blow up the entire world financial system.

On top of that, it was announced by Miyazawa, the finance minister, three weeks ago, when talking about the Long Ter mCredit Bank, one of the big 19 banks in Japan, which is in very big trouble, that, as he put it, if they have 380 billion of derivatives on top of non-performing loans, and, as he said, if they failed, this could lower the credibility of Japan, which is an understatement; but then said, that this could lead to a Japan-triggered world financial breakdown.

Now, this is the finance minister of the second-largest economy of the world.

What has happened in recent weeks, is that there's a liquidity squeeze so severe, that reports we have out of Japan is that the Japanese Central Bank is putting Treasury securities into Japanese banks, and other dollar deposits, so that they will have enough dollars, because nobody is willing to lend the Japanese banks dollars on the overnight market, because they don't believe the Japanese banks are going to be there tomorrow.

So, this crisis by itself could blow up the world financial system.

Then you have the ongoing situation in Russia, where there was a default declared on August 19th of all foreign debt, which ended the world financial system in its current form as we know, as Lyndon LaRouche has said repeatedly. And there you have a situation in which we don't even know still the size of losses which may have occurred from the derivatives, which were about $100 to $150 billion in the Russian market.

So you have these two major places hanging over the world right now.

PAPERT: Now, what about Brazil? Brazil seems to be going through something like what happened in Russia earlier.

FREEMAN: Precisely. Brazil... fascinating. Their foreign reserves, which are the reserves a country keeps in its central bank of other currencies, and its own currency, mostly dollars, at the start of August, was about 70 to 75 billion. It is now down, as of September 22, to 42 billion. So they have lost at minimum 28 billion, maybe 33 billion, of reserves. This means capital is fleeing the country. They will have to tackle the question that they will have bonded debt, the Brazilians, at the end of this year, of 320 billion dollars. The danger is, that the Brazilian economy is the second largest in our hemisphere, after our own, and their financial system is quite huge. They could go go under.

And, again, this shows you the hypocrisy of what's going on. People say, well, there's no trouble with Brazil. Brazil is sound. Yet, last week, Brazil's president, Sir Enrique Cardoso, said that Brazil might consider a loan from the International Monetary Fund, which people have put as large as $50 billion. Well, if everything was fine in Brazil, why do they need a $50-billion loan from the IMF, an IMF which is already bankrupt to start?

If Brazil goes, there will be no emerging market, as they call Third World economies' markets, standing. It is simply the biggest of them all. It will bring down the whole North American, and South American, financial system. All the secondary markets, like the Brady bonds, the devalued bonds which are trading, will go out the window.

And what people have to think about, from the point of view of the United States: If this happens with Japan, Russia, Brazil, go, you trigger the $140-trillion derivatives market, of which the United States has $40 trillion. If that happens, regardless of what's the instigating incident, you will have a meltdown of the 7 to 8 largest banks, people will lose their checking accounts, their savings accounts, their pensions, their social security -- there will not be a banking system left standing in the United States, and we're inches from that.

PAPERT: Now, in response to that danger, Mr. LaRouche called for a New Bretton Woods, harkening back to Roosevelt's Bretton Woods Conference in 1944, which formed the post-war monetary system. Since then, some unlikely characters have also called for a New Bretton Woods, including Tony Blair and leaders of the French government. What's that about?

FREEMAN: Well, Tony Blair represents what Mr. LaRouche has identified as the `Third Way,' which I guess is neither man nor woman. And their proposal, Blair spoke Sept. 21st in New York, is to set up a new international financial authority which, among some of the things it would do, would manage risk-management of these derivatives. So, they take a recognition that there's a problem. Only the most insane people today would not admit there's a problem.

So then they say, we will put up a new institution -- we will manage the risk. I think the point that is very clear, is that we don't need a new institution to manage the risk; we need to get rid of these derivatives from top to bottom, and this is just pure fakery, which he has sold to certain people in the French government. He's made overtures to the United States government. So far, the United States has not bitten at these proposals. But these will come up.

I think what people need to focus on, is what Lyndon LaRouche, who put forth a proposal for a New Bretton Woods system, and actually has called for a reorganization of the monetary system for at least 30 years, and whose authority is going up by leaps and bounds every day, because he's the only accurate economist over the last 30 years, including his last forecast, which he made in 1994, predicting exactly what would happen, forecasting this.

He has issued a statement which, if I could, I'd just like to mention one feature of it. And people can see this on the web site of the Executive Intelligence Review, and also in the next issue of Executive Intelligence Review magazine.

PAPERT: The web site is larouchepub.com.

FREEMAN: And this is a major statement. It's called ``What each among all nations must do now,'' and it was issued September 27th, as this crisis became deeper and deeper. And, if I could just identify two points.

LaRouche says, ``In general, it must be recognized that this is not only the most explosive and dangerous financial and monetary emergency in modern history, but an immediate and unavoidable threat.... There will be, repeatedly, objections in the form of: `Is it really that bad, after all?' The answer is, invariably, `It is not only that bad, but much worse.' To the related objection, `But are such measures really necessary, after all?' The answer is, `Your life and your family's life probably depend upon these actions.'"

I'd like to just cite one of eight measures that Mr. LaRouche cites, and urge people to get a hold of it.

But he says, ``Under this assertion of sovereignty, each nation must assume perfect sovereignty respecting its financial monetary, and economic affairs. Under present circumstances, this requires immediate measures of capital controls, exchange controls, international regulation of financial and monetary affairs, and terms of trade, by each and all individual sovereign nation-states. This must include the setting of protected prices for essential commodities of domestic consumption and export-import trade.... It is by parallel and cooperative use of these measures, that national economies shall be defended against an already inevitable, early, sudden, and rapid collapse of fictitious financial instruments.''

So, I think that the point that we would make off of this, is that the crisis-management approach, or as people saw in the Greenspan statement -- the very last words he says, we're going to approach this ``ad hoc,'' -- crisis management, muddling through, is just another word for impotence. And what we must have is the type of leadership that FDR represents, and Mr. LaRouche has represented, of saying, you cannot save this syste m-- it is not worth sacrificing the human race to try and do it. There are proposals which have proven that they will work, as you cited 1944, we know how this system can be put back together.

PAPERT: Yes, or as Angela said, at the beginning of our show, there is no globalist future, there is no future for these multinational institutions. There is either a future for sovereign nation states, or basically no civilized future worth living in at all.

FREEMAN: Exactly, And we can rebuild the productive capacities. We know how to do that. We put credit into a federalized Federal Reserve, which becomes a third national bank, and put 6- to 700 billion into infrastructure, creating 6-8 million productive jobs, building the sorts of things we need in this country.

Alan Greenspan, Banking & Ayn Rand
When This Man Talks (or Even Whispers),Whole World Listens
James N. Thurman, Staff writer of The Christian Science Monitor

He looks vaguely like Woody Allen - if Woody Allen were a tall, mumbling economist instead of a short, talkative filmmaker.

He loves parties and tennis, yet is so noncommittal in conversationthat he's been known to avoid commenting on the weather.

He's Alan Greenspan - the central banker's central banker,a bureaucratic bon vivant, and indisputably one of the most powerfulindividuals in the world today.

As stock and currency markets gyrate from Asia to the Americas,US Federal Reserve Chairman Greenspan has increasingly takenon the role of symbolic head of the new global economy.

In recent public remarks, he has said that something must bedone to cal mroiling economic waters. Last week, his hints thatthe Federal Reserve will cut interest rates when it meets todayin Washington sent a brief burst of optimism coursing throughthe world's bourses. Asian markets, as well as the Dow Jones,blipped up.

"Greenspan, more than any other central banker in theworld, understands that this is a global liquidity crisis thatwill deepen and will assuredly hurt all the major economies,"former Fed economist Catherine Mann told the Reuters news agencythis week. "He is taking on a role as a global financialleader."

To a certain extent, the head of the US Federal Reserve hasalways been a preeminent player in global economics. The sizeof the US economy and the solidity of the dollar ensure as much.

Mr. Greenspan's predecessor at the Fed, the gruff, fly-fishingdevotee Paul Volcker, was long a general in the world's fightagainst the inflation that ravaged much of the developed worldin the 1970s and early 1980s.

Unique circumstances may have made Greenspan today's worldeconomic commander in chief, however. At a time of turmoil, somekey global economic players, notably Japan, appear to have decidedthat the best course of action is to do nothing. Europe, for itspart, is focused on problems posed by the merger of national currenciesinto the single Euro.

New players such as Russia do not have the expertise or statureto lead. The US president is hobbled by his scandal problems,while administration economic officials cannot even get Congressto vote more cash for the International Monetary Fund.

THAT leaves Greenspan. As head of the Federal Reserve, he isappointed by the president - but tradition and the Fed's charterensure some leeway for independent action.

Greenspan has said in the past the US economy is unlikely toremain an island of prosperity in a sea of troubles. And in speakingto the Senate Budget Committee last week, the usually opaque Fedchief made remarks that many experts interpreted as a hint ofa coming cut in interest rates designed to help the whole world,not just the US. "We have to bring the existing instabilitiesto a level of stability reasonably shortly," Greenspan toldsenators. "I think we know where we have to go."

Many experts hope Europe would follow a US lead toward lowerinterest rates. Such cuts could slow the flight of money fromAsia and troubled developing economies into relatively safe Westernbank havens.

But who is this man whose pronouncements can send brokers'hearts soaring, or sinking, across the globe?

He's a native New Yorker. His first focus was music: He attendedNew York's Julliard School and toured the country for a year inthe early 1940s, playing in the Henry Jerome swing band. If nothingelse, friends believe, this experience of US travel gave him theability to connect dispassionate economic theories with the individualsthey affect.

"The most outstanding thing about him is he knows theAmerican economy ... how many black left shoes are produced inJohnstown, Pa.," says friend Herbert Stein, an economistat the American Enterprise Institute here.

A swing into economics carried him straight into moderate Republicanpolitics. He advised Richard Nixon in his 1968 campaign, and servedbriefly in the Bureau of the Budget.

Seven years later, he returned to government service, replacingMr. Stein as chair of the Council of Economic Advisers in thefinal days of the Nixon presidency. He agreed only after beingassured that Vice President Ford would keep him.

In that role, he helped formulate the inflation-fighting blueprintof the 1970s that reduced inflation from 11 to 6.5 percent.

Greenspan is also known for taking hot morning baths that lastas long as an hour, with his in-box within reach. The practicebegan years ago to counter a bad back.

That has not kept him off Washington's tennis courts, wherehe is a renowned competitor. "I found his intensity remarkableand his approach shot serious," says a recent partner.

Married to NBC newswoman Andrea Mitchell, Greenspan is alsofamous for his syntax, or rather, the way it conceals virtuallyanything that could be said to be an opinion. This is partly theresult of the natural reticence of Fed officials, who understandthat markets hang on their every word. But it is also part ofGreenspan's personality.

One friend remembers encountering him in an airport, afterviolent storms had almost shut down air traffic on the East Coast.Asked about the weather, the Fed chairman said hesitantly thatit was "OK."

"He couldn't even bring himself to be conclusive aboutthe weather!" says the friend.

Greenscam -- Fake Money & Fake Inflation/Deflation as Theft

Jerry White's Report, Sept 1, 1998

Article 1 Section 8. The Congress shall have Power....... To coin Money, regulate the Value thereof, and of foreign Coin,

Alan "Greenscam" has been allowed to raise interest rates 9 times since 1994 -- for a total of 2 1/2% -- during a period of wage deflation; adding 125 billion dollars to the budget deficit, and robbing home buyers and consumers of 100s of billions. This thievery has strengthened the dollar 80%; resulting in a quadrupling of the trade deficit, and costing thousands of American jobs. The bankers on the other hand have enjoyed record profits, due to this massive transfer of wealth.

ACCELERATING PRIVATE PARTICIPATION IN INFRASTRUCTURE IN EAST ASIA The World Bank Group has estimated total market requirements for infrastructure in East Asia at US$ 1.2 to 1.5 trillion over the next decade. Despite keen interest, the number of private projects underway is well short of the potential. This session will focus on critical constraints to increased private participation and possible remedies.

The gap in expectations and perceptions of risks

Government objectives, commitment, and decisionmaking processes

Sector policies and legal and regulatory framework

Unbundling, mitigation, and risk management

Domestic capital markets and mechanisms to provide long-term debt

Transparency and competition in contracting Instead of our taxes being used to promote the general welfare, they are being diverted to the multinational companies (foreign aid, Export/Import Bank, IMF-World Bank). According to Ralph Nader, this corporate Welfare is costing the American people over 200 billion dollars a year. Also, instead of promoting jobs for Americans, they are creating employment for foreigners. I believe that giving aid to enemies of America -- multinational companies -- constitutes Treason!

Etc

Society

Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers :   Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism  : The Iron Law of Oligarchy : Libertarian Philosophy

Quotes

War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda  : SE quotes : Language Design and Programming Quotes : Random IT-related quotes :  Somerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose Bierce :  Bernard Shaw : Mark Twain Quotes

Bulletin:

Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law

History:

Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOS :  Programming Languages History : PL/1 : Simula 67 : C : History of GCC development :  Scripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

Classic books:

The Peter Principle : Parkinson Law : 1984 : The Mythical Man-Month :  How to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

Most popular humor pages:

Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D

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Last modified: March 12, 2019